Apple Inc. Financial Analysis
Apple Inc. is an American company that specializes in the manufacture, design, and marketing of personal computers, portable digital music players, mobile communication devices, consumer electronic products, and other third-party digital content and applications (Datamonitor, 2012). Apple’s business strategy entails being committed to the delivery of the best user experience to the targeted audience through the delivery of high quality and innovative products. Primarily, the company targets individual consumers, small and medium sized businesses, governments, education, and enterprise markets (Datamonitor, 2012).
Revenue Analysis
In the FY2010, Apple Inc. recorded revenues totaling $65,225 million while the revenues for the FY2011 amounted to $108,249 million (Apple Inc., 2012a). This represents a 66% increase in 2011. These revenues comprised of income obtained from the sale of digital content and applications, software, hardware, peripherals, service, and support contracts. Important adjustments made during the process of recording revenue included reductions to revenue depending on the range of estimated commitments relating to customer incentive programs and price protection initiatives (Apple Inc., 2012a).
Apple Inc.’s reports revenue collection depending on geographic division and as well, according to the eight product divisions. Geographic divisions consist of the Americas, Europe, Japan, Asia-Pacific, and retail sales (Apple Inc., 2012a). In the FY2011, the Americas generated much of Apple Inc.’s revenue with a total of $38,315 million followed by Europe ($27,778 million), Asia-Pacific ($22,592 million), Retail Sales ($14,127 million), and Japan (5,437 million). The same revenue by geographic segment for FY2010 was $24,498 million for the Americas, $18,692 million for the European Segment, $9,798 million for the Retail segment, $8,256 million for the Asia-Pacific, and $3,981 million in Japan segment (Apple Inc., 2012a).
Speaking of the product division, Apple Inc. divides its product categories into 8 divisions that include desktops, Portables, iPods, iPhones and related products and services; iPads and related products and services; peripherals and other hardware; software, service, and other sales; and other music related products and services (Apple Inc., 2012a). The revenue comparisons for these product segments can be represented in the table below.
Product Division
FY2011(millions)
FY2010 (millions)
iPhones and related products and services
iPads and related products and services
iPods and related products and services
Peripherals and other hardware
Software, other sales, service
Other music related products and services
Gross Margin
The net income for the FY2011 was $25,922 million and the net income for the FY2010 was $14,013 million. Speaking of the gross profit, Apple Inc. recorded a gross profit of $43,818 in 2011 and $25,684 in 2010. Similarly, the gross margin percentage in 2010 was 39.4% and increased to 40.5% in 2011 (Apple Inc., 2012b).
Operating Expenses
Apple Inc. operating expenses comprised of research and development costs (R&D), costs incurred in selling, general, and administration (S, G&A). For the FY2011, research and development costs amounted to $2,429 million as compared to $1,782 in 2010. This represents a 66% increase in R&D costs (Apple Inc., 2012b).
Liquidity and Capital resources
This section entails the volume of cash, cash equivalents, and marketable securities for Apple Inc. Other items that fall into this category include annual operating cash flow, net receivable accounts, working capital, and inventories. The values for these items can be represented below.
Liquidity and Capital Resource
FY 2011(millions)
FY2010(millions)
Cash, cash equivalents and marketable securities
Annual operating cash flow
Working capital
Accounts receivable, net
Common Share Price range
Apple Inc. is quoted on the NASDAQ Market and trades under the symbol AAPL. Its common stock is traded on the over-the-counter market. As per the Fourth Quarter performance of 2011, Apple Inc.’s. price per common share ranged between $422.86-$327.25 as compared to the $293.53-$235.56 Fourth Quarter price range per common share in the FY2010 (Apple Inc., 2012). The basic earnings per common share for 2010 were $15.41 as compared to the $28.05 in 2011.
Balance Sheet Analysis
An analysis of Apple Inc.’s balance sheet reveals that the total assets for FY2011 were $116,371 million as compared to the $75,183 million in total assets for the FY2010. Among these figures, the total current assets for FY2011 totaled $44,988 million and $41,678 million for 2010. Similarly, the total liabilities for FY2011 and FY2010 were $39,756 million and $27,392 million respectively (Apple Inc., 2012a). The current liabilities for FY2011 and FY 2010 were $27,970 million and $20,722 million respectively. These figures can further be used to calculate the current ratio and debt to equity ratios for Apple Inc.
Current Ratio
The Current ratio shows the repayment capability of Apple Inc. repaying short-term debts and other financial obligations and liabilities for a period not exceeding 1 year.
Current Ratios (Current assets/Current Liability)
The decrease in the current ratio in 2009 shows that Apple Inc. cash and receivables are enough for enabling the company account for expenses on current liabilities but the ability is decreasing.
Datamonitor (2012). Company Profile: Apple Inc. Datamonitor
Apple Inc. (2012a). Form 10-K: Apple Inc. SEC & Apple Inc.
Apple Inc. (2012b). Two-year Financial History: 2011 and 2010. Apple
